The Conceptual Framework for Financial Reporting 2010 states

The Conceptual Framework for Financial Reporting 2010 states the objective of general purpose financial reporting as “to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit.”

REQUIRED :

1. Identify and describe any two (2) proposals for amendment as contained in the Exposure Draft Conceptual Framework for Financial Reporting ED/2015/3. Discuss the deliberations in these proposals, and their basis for conclusions.

Solution

As per the Exposure Draft the objective of general purpose financial reporting is to provide financial information about the reporting entity to the users in assessing the prospects for future net cash inflows to the entity and in assessing management\'s stewardship of the entity\'s resources that keeps the going concern assumption -going.to this end, the draft expressly states the two statements -statement of financial position and the statement of financial performance. The draft draft brings out the relevance of the reporting entity and consolidated financial statements.

2. ED\'s proposal on definitions of assets and liabilities and income & expenses are definitely improvisations over the currently prevailing ones.The concept of present obligation with respect to liabilities will be helpful.

The draft proposes to give more prominence to prudence and faithful representation to primary users of the financial informations. with respect to the term primary users- the draft identifies these users as existing and potential investors, lenders and other creditors- who use the financial informations for the purpose of deciding about their investment or otherwise, in the entity.